March 28, 2019

Trade war now touches all US med device manufacturers:

As of January 17, 2019, the Trump administration is considering eliminating tariffs on billions of dollars of Chinese imports to spur progress toward a trade deal, less than two weeks before a high-level delegation from Beijing is scheduled to arrive in Washington for talks.

As the trade conflict between
the U.S. and China grows in both size and scope, uncertainty about the future
has U.S.-based medical device manufacturers preparing against larger impacts.
Chinese retaliatory tariffs now reach nearly every U.S. medical device exported
to the country, according to recent reports.

U.S. Treasury Secretary
Steven Mnuchin in recent weeks has proposed a tariff reduction as an incentive
for China to sweeten its offer to the United States, according to two people
familiar with the discussions who were not authorized to speak publicly.

Administration hard-liners,
including U.S. Trade Representative Robert E. Lighthizer, are opposed to
eliminating the tariffs before China has taken irreversible steps to meet U.S.
demands.

Last year the president imposed
tariffs on Chinese industrial and consumer goods as leverage in talks aimed at
shrinking the U.S. trade deficit and forcing China to abandon discriminatory
trading practices.

If negotiations do not
succeed by March 1, tariffs on $200 billion in Chinese products are scheduled
to rise to 25 percent from 10 percent. Officials now are debating whether to
instead eliminate the levies on some or all of the affected Chinese goods.

Last September 24, the Trump
administration imposed 10% tariffs on $200 billion worth of imports. At the
same time, China returned with 5% to 10% tariffs on $60 billion of U.S. goods,
including $3.5 billion in medtech-related trade.

Added to tariffs levied this
past summer, the latest round totals nearly all U.S. medtech exports to China
in 2017, or about $4.75 billion, according to AdvaMed, the industry’s trade
association.

“Depending on where you are
in the industry, the tariff situation and related activities will impact you
differently,” AdvaMed CEO Scott Whitaker said.

In addition, because of the
disparity in the total dollar amounts between the two countries, China also
threatened to impose extra, unspecified, non-tariff barriers with more qualitative
effects, such as slowing regulatory approvals or investigating various
companies’ operations within the country.

The latest $200 billion in
tariffs on imports from China increased from 10% to 25% on Jan. 1, after the
holiday shopping season. President Donald Trump has also called for an
additional $267 billion in tariffs on top of that, totaling essentially all of
China’s exports to the U.S., depending on the country’s actions going forward.

“As the number as gotten
bigger, and as the back and forth between China and the U.S. has grown, we’re
starting to see it impact us a little bit more,” Whitaker said. “When you get
to $267 billion, then you’re really starting to affect all aspects of the
economy.”

So far, the two biggest
winners in the US-China trade war are Brazil and Russia.

Over the summer, China began
retaliating to counter moves by the Trump White House to level 25% tariffs on
Chinese imports, first slapping tariffs on $1.125 billion in U.S.-made medical
devices. But a second round of retaliatory Chinese tariffs responding to Trump
tariffs on Chinese imports brought the total leveled against U.S. medical
technology products to more than $4.7 billion, AdvaMed said.